As expected, concern over the safety of their bank deposits has spread across Europe. Reuters reports that while Europeans outside of Cyprus have not rushed to take their money out of the banks this is simply because they do not know where else to put it.
I suspect that there are any number of financial players, think money market mutual funds, who are rapidly gearing up to explain why they are a better alternative than a bank.
Their argument is pretty simple. They might say that unlike a bank, they don't carry the risk of having the government confiscate your money to recapitalize the banking system.
So the final word on how much in deposits this will cost the global banking system will take a while to determine.
What can be determined is that the EU policymakers have managed to violate the cardinal rule and ended the public's trust in the safety of bank deposits.
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